on the broadcast tonight, stranger than fiction. the sexual assault case against dominique strauss-kahn teeters on the edge of collapse as prosecutors question the credibility of the woman who made the charges in the first place. home for the holiday. many people hit the road, but even more are staying put for this fourth of july weekend. lights ou minnesota state government shuts down over a $5 billion budget deficit. and "making a difference." bringing the gift of hearing to kids in need, even if it means traveling to dangerous places. plus, new rules for air traffic controllers, will you feel safer if they're listening

to music on the overnight shift? "nightly news" begins now. captions paid for by nbc-universal television good evening, i'm kate snow in for brian. it was a stunning turn in a case involving one of the world's most powerful men. today the former head of the international monetary fund was released from house arrest after prosecutors said the woman who had accused him of sexual assault in a new york hotel room may have serious credibility problems. strauss-kahn still faces charges, but today's move could be the beginning of the end of a case that seized attention from new york to paris. ron allen is at the courthouse in lower manhattan where it all unfolded today. ron, good evening. >> reporter: good evening to you, kate. yes, it was an amazing day down here. especially booze prosecutors seem so confident in their case against strauss-kahn and they never expressed any doubts

publicly about the alleged victim's story. today they reveal she's been giving conflicting accounts about what happened that night and conflicting accounts of other aspects of her life. some of it very unflattering. now it seems this case may be falling apart. with his wife by his side and a smile on his face, dominique strauss-kahn left court, free on a $6 million bond. he returned to his luxury townhouse, but he's no longer required to stay there under house arrest, which cost him some $200,000 per month. a dramatic contrast to the may perp walk that led to his resignation as head of the imf and seemed to ruin his chances of becoming president of france. today his attorneys claimed vindication. >> it's so important in this country that people, especially the media, reserve their judgment on the facts of a case until they're all in. >> there will be no rush to judgment in this case.

>> reporter: in court, prosecutors had admitted strauss-kahn's accuser a 32-year-old from west africa has made numerous conflicting and false statements, starting with a claim she was gang raped and fleeing a brutal government when she applied for asylum in the u.s. in 2004. in a letter, prosecutors wrote, she stated that she fabricated the statement. and in may, after the alleged attack at this luxury hotel, the woman had said she ran into the hallway and reported the crime to a supervisor. but prosecutors say she later admitted she proceeded to clean a nearby room and then returned to suite 2806, strauss-kahn's room and began to clean, before she reported the incident to a supervisor. >> after the indictment against the defendant was filed, we continued as an office to investigate the case rigorously as we do, and are obligated to do. that investigation raised concerns about the complaining

witness's credibility. >> reporter: sources close to the investigation say the woman called a suspected drug dealer after the incident to discuss how to profit from it. her attorney pleaded her case before a crush of international media. >> it is a fact that the victim here made some mistakes, but that doesn't mean she's not a rape victim. >> reporter: he claims she was bruised, her stockings torn and that there's forensic evidence of a sexual attack. >> the interesting thing will be to determine whether a jury will ever be allowed to weigh strauss-kahn's word against the hotel maid's word. or whether prosecutors will decide to dismiss this case. >> reporter: that's exactly what the woman's attorney fears, that the prosecution will not go forward now. he said she will soon come out of hiding to plead her case publicly, and plead for justice. kate? >> ron allen reporting. thank you. what will prosecutors do next?

rikki kleiman joins us live with more. rikki, where does the case go from here? >> the case is going downhill and it is going to fall apart. it may be completely over, perhaps as soon as the next court appearance or not. what you have inside vance's office, he's got to look at this alleged victim, look at her story, look at these statements, talk to her again, continue his investigation, meet with the defense lawyers, see what the defense has to offer, and then he has to use the most prominent tool in his toolbox, which is prosecutorial discretion. and in many d.a.'s offices around the country, at this point in time, looking at her problems, it may mean he has to dismiss the case. >> as her lawyer pointed out, even if the female accuser has been inconsistent or she's told lies or cheated on her taxes, it's still possible she's a victim of sexual assault, no? >> well, of course. you could have a prostitute that could be a victim of sexual

assault. a liar, a cheater a drug dealer can be a victim of sexual assault. however, in this particular case, what you have to look at, she's not only lied, she's lied about the fact that she was raped before, in her political asylum application. she's lied to the grand jury about fundamental facts, including the fact that she went back and cleaned the rooms. so it's not like the grand jury got the real person. this is a different set of circumstances for this d.a.'s office. but, should they go forward? well, sure, they can throw prosecutorial discretion out the window and say, let a jury decide. but that may be an abdication of responsibility. >> and the attorney for this accuser said in court today that he's concerned the manhattan d.a. is afraid to try this high-profile case and lose. there's been speculation on that.

the bottom line, was this case treated any differently because of who dominique strauss-kahn is? >> i think if it was treated any differently, it goes to the detriment of dominique strauss-kahn, not the benefit. the only thing that was really different here was he was going to leave the country. they immediately felt and knew what they had at the time, and that was all they could do, if he was going to flee the country they had to get him off the plane, otherwise, you've got a situation where he should be treated like every other person and that means if you don't have the evidence, you do justice. >> rikki kleiman, thanks for the analysis tonight. appreciate it. now to france, where before the sexual allegations against him, dominique strauss-kahn was a political force, a likely challenger to president sarkozy. the scandal changed all that and led to a national dialogue about french attitudes toward women and sex. now the shock of this latest news. nbc's martin fletcher joins me now from paris. martin? >> reporter: hi, kate. france is buzzing today, nobody

here is saying strauss-kahn is guilty or innocent. but they do say that the rush to judgment was never fair, and the latest news proves it. the news hit france, as they say here, like a thunderbolt, special reports on all tv networks. the case has riveted france. it brought down the man who was favored to be the country's next president. to some in this cafe, the sudden twist is a morality lesson. one should have waited before judging people and destroying someone's life in seconds. others were less kind. >> i feel anyway his image is rocked. >> reporter: nevertheless there is a fever of speculation today in france. will strauss-kahn come home vindicated? might he still have a shot at being president? his political colleague, jack lang, a former education minister, thinks so. >> he's a good man, a good candidate. >> reporter: it isn't just

politics, though. after strauss-kahn was arrested, hundreds of french women took to the streets in paris in support of the alleged victim and a nationwide debate began on the status of women. elaine's new book is called le seduction. how the french play the game of life. with the latest news, that long overdue debate on the status of women, she says, suffered a major blow. >> this is an incredible moment for france, because women are starting to say, enough. i really think the fact that she is a less credible witness is going to harm the debate. >> reporter: if the charges against strauss-kahn are dropped, his social supporters say he could play a major role in their party. but the president of france? one bar patron seemed to sum it all up. there will always be a doubt, she said, and i don't think anyone wants a sex-crazed president. strauss-kahn withdrew from the presidential race, so anyway, he can't run.

but political analysts here are saying if the charges of sexual assault are dropped, he could still play a major role in french politics. kate? >> martin fletcher, thank you. still overseas, to libya, where protesters were rallying in support of the ruling regime. after months of fighting between rebels and pro-gadhafi forces, just where do things stand? nbc's stephanie gosk is in tripoli, libya tonight. stephanie? >> reporter: good evening, kate. this is one of the largest rallies we've seen in recent weeks. thousands of supporters came out with guns and flags to show their support. gadhafi phoned in to state tv to address the crowd and to warn nato if they continued with this bombardment, that their countries would be next, their homes, offices and families. this speech was just 24 hours after his daughter told french tv that the government is actually in informal talks with the rebels. she then went on to call the

rebels the devil. not exactly diplomatic language. kate? >> after months, where do we stand now? are the rebel forces making any gains? are we any closer to gadhafi stepping down? >> reporter: well, if the idea is that rebel forces will make a big push into tripoli and force him to step aside, that's unlikely to happen any time soon. they have been making progress southwest of here. they've been battling over the city of bir al ghanim. today gadhafi's forces pushed back hard. they showed when they want to, they can outgun the rebels. there's a sense that gadhafi is doing what he can to drag this conflict on. he's holding the rebels back, but not going on the offensive, he's used a large security force to control this city. a strategy that seems to be working even with these large air strikes. kate? >> stephanie gosk, in tripoli, thank you. back in the u.s., the fourth of july weekend getaway is underway. while we promise not to use the word staycation, we find ourselves having to say it

again. americans just aren't traveling great distances on this holiday. nbc's aditi roy joins me from santa monica. >> reporter: 49 million americans are hitting pools, parks and beaches to escape hot temperatures. it seems this year, we're choosing holiday destinations that are closer to our backyards. for carrie, getting away means staying at a hotel with a deal only 30 miles away. >> it's like taking a little vacation somewhere, not very far away. it doesn't take long to get here. >> we're actually traveling very cheap. >> reporter: this family is traveling by air, but no hotel. >> we're getting picked up from the airport instead of having to rent a car, and we're staying at a family's house. >> reporter: pairing down for marcella, means staying home. >> i cannot afford any more to go anywhere. are you kidding me? >> reporter: gas prices have dipped 45 cents recently, but

they're still 80 cents higher than they were this time last year. that with rising hotel and car rental rates has road travel down. >> you will have some people who will economize by traveling shorter distances, shortening the duration of their trips. >> reporter: people aren't the only ones cutting back, cities like chicago and austin have cancelled fireworks displays because money is tight. weather conditions, drought and wildfires have snuffed out fireworks in arizona, texas and new mexico. >> with the high heat and very dry conditions that we find ourselves in, it could be an incredibly dangerous thing to do. >> reporter: the mercury's rising, temperatures across much degrees above average. >> it's going to be a tough weekend to be outside. a lot of people are going to want to be near water. >> reporter: for those looking for sizzle on the grill. the average cost of a cookout this year is $61. up more than $6 from last year.

if you really want to cool off, there's still skiing in mammoth, california today. from snowy mountains to shining seas, america's holiday december tipations are bountiful, even if america's pocket books are not. the top three travel destinations this year are orlando, new york and right here on the beach in los angeles. kate? >> aditi roy, thanks so much. when we come back, not just time off for the holiday this weekend, the land of 10,000 lakes is shutting down lakeside parks and a whole lot more. later, "making a difference" for kids with hearing loss. even risking his own life in the process.

this may sound familiar, democratic and republican lawmakers in a stand-off over the budget and neither side wants to budge. yes, it's happening in washington, but it is also a debate going on in states across the nation. tonight in minnesota, the stand-off has turned into a

shutdown. here's nbc's john yang. >> reporter: as the holiday weekend begins, minnesota state parks and campgrounds are locked shut. earlier, sarah hanson took her five kids to a swimming hole. >> we decided to come out here one last time. we heard it was going to shut down, so we got out here at 3:30 to go swimming one more time. >> reporter: also closed? state offices like driver's license exam stations, highway rest stops, even the state lottery. 23,000 state workers are laid off. it's all because the republican-controlled state legislature and the democratic governor can't agree on closing a projected two-year, $5 billion deficit. like president obama, governor mark dayton says any deal has to raise taxes. >> the republicans insist that inequality continue so that millionaires do not have to pay $1 more in taxes. so far they have. >> reporter: like their

counterparts, minnesota republicans say savings should only come from spending cuts. >> this is about shutting down government for a political purpose. very disappointing. >> reporter: the national conference of state legislature says at least 31 states from hawaii to maine began the current budget season with deficits totalling more than $86 billion. >> the fact that this fiscal crisis affecting state budgets has gone on for well over three years means that the decisions about what to do get harder each progressive year. >> reporter: as the economy improves, there may be different kinds of fights. in south carolina, republican governor nikki haley and republican lawmakers are fighting over where higher than expected revenue should go, to restore spending cuts or cut taxes. a problem many governors and lawmakers would probably love to have right now. john yang, nbc news, chicago. even as governments wrestle

with budget problems, there was euphoria on wall street this week in the wake of another bailout for greece. the dow was up more than 168 points on the day, capping its biggest weekly gain in more than two years. a month's worth of losses have been regained in just five trading days on all three major indexes. the dow gaining 5.4% on the week. the nasdaq up 6.2% and the s&p 500 up 5.6%. that is one huge week. when we come back, another royal wedding. this one a bit more low key than the last one.

maria shriver formally filed for divorce from her husband of 25 years today. they cited irreconcilable differences. they separated in may, and a week after they split, he acknowledged fathering a child with a member of their household staff. as america gets ready to celebrate independence day, today was the big holiday just to our north. canada day hosted a couple very special guests this year, prince william and his new bride kate took part in the ceremonies. kate middleton sporting a patriotic red and white ensemble. wearing a maple leaf brooch the queen wore on her first trip to canada back in 1951. aides to the royal couple say they are thrilled and touched by how they've been welcomed in canada. there is one somber note, today would have been the 50th

birthday for william's mother princess diana. in other royal news tonight, monaco's prince albert married his long-time girlfriend in a low-key civil ceremony. they'll have a lavish church wedding tomorrow. the bride is a former olympic swimmer from south africa. the 53-year-old groom the son of prince rainier and princess grace. the former grace kelly who died in 1982. here's one of brian's favorite topics, airline travel. after a rash of air traffic mishaps caused by controllers sleeping on the job, the faa and the controller's union agreed to some new rules aimed at helping night shift workers stay alert. one change will allow controllers who feel too tired to perform properly to request leave or be assigned other duties. the one that really caught our attention today, they will be allowed to listen to the radio or read what is called appropriate material between the hours of 10:00 p.m. and 6:00 a.m. in order to keep from drifting off. helping children hear for the first time.

what the world really sounds like. how one man is making a difference.

time now for our friday "making a difference" report. and a man whose mission is to help children who suffer from hearing loss, but don't have the resources to fix it. he's had to deal with some tricky political situations and dangerous terrain. the payoff, allowing a child to hear for the very first time, well, that's really making a difference. here's nbc's john ray. >> reporter: it's a scene that could be played out in any school yard, with one difference. you notice the quiet. even when 11-year-old walid has life changing news, it's his

hands that do the talking. he's telling his friends that soon he'll be able to hear. news that's got everyone excited. what's interesting right here, right away -- of course it's like every other playground conversation, except that it's conducted in almost total silence. what are they telling me now? what does that mean? >> i love you. >> reporter: i love you. it's clear the kids have so much to offer. but like walid, they're trapped in a silent world that can seem confusing, even frightening. >> he's very afraid from the outside, from when he's small. he's afraid to go outside alone. he says i know nothing, because he didn't hear. >> reporter: from five and a half thousand miles away in minnesota, one man has a bit of hope. >> the good news, we can fix this. >> reporter: he's been providing hearing aids for the hearing

impaired in some of the poorest places on earth. >> it's the most incredible thing in the world to be able to give somebody a birth right, a connection to life. >> reporter: this is his first mission to the west bank, which means crossing israeli army checkpoints and in working with israeli doctors discovering barriers that can be harder than deafness to overcome. >> this is practically the only contact they've ever had with israelis. >> reporter: walid is about to make his first contact. >> is it good or is it too loud? he says it's not too loud, it's good. he likes it. >> reporter: his journey into the world of words won't be easy. >> he has to hear the words to develop the vocabulary. >> reporter: play time no longer passes in silence. and when friends call his name, walid is listening.

john ray, nbc news from the west bank. that is our broadcast for this friday night. thank you for being with us. i'm kate snow in tonight for brian. have a happy and safe fourth of july weekend. good night. -- captions by vitac -- www.vitac.com >> right now at 6:00, it's official. maria shriver has filed for divorce. what was there a prenuptial. >> chevron is getting a huge tax return and a lot of cities are not happy. i'm live in martinez. i'll tell you about it in a live report. >> a live look outside over the bay bridge. a beautiful shot. it's a holiday scorcher. details on a warm-up this